Hold vs. Sell Rental Property Calculator

Deciding whether to sell a rental property or hold it longer is one of the highest-stakes financial decisions a real estate investor makes. This calculator compares the after-tax net proceeds from selling today — including the full four-layer federal tax stack (§1245 recapture, §1250 unrecaptured gain, LTCG, NIIT) — against the net present value of holding for 1–20 more years, incorporating appreciation and cumulative after-tax cash flows.

Property Details

Original purchase price ($)

Land as % of purchase price (%)
Land is not depreciable. Typical: 15–25% suburban, 30–45% urban. Check your county assessment.

Property type

Years already held

Current market value ($)

Selling costs — commissions + closing (%)
Typically 5–7% of sale price. Reduces your realized gain.

Remaining mortgage balance ($)
Used to compute net cash-at-closing. Does not affect the tax calculation.

Depreciation

I did a cost segregation study (adds §1245 ordinary recapture)

Suspended PAL carryforward ($)
Released in full on complete disposition under §469(g). Offsets taxable gain first; any excess reduces other ordinary income.

Your Tax Situation

Filing status

Other taxable income this year (excl. this sale) ($)
Wages, business income, other gains. Determines your ordinary bracket and which LTCG rate applies.

REPS / material participation status

Hold Scenario

Years to hold longer: 5

Expected annual appreciation (%)
National average: ~4%. Adjust for your market. Applies to current value to project future sale price.

Annual after-tax cash flow ($)
Money in your pocket each year after all expenses (mortgage P&I, taxes, insurance, repairs, management) and income taxes on rental profit. Enter 0 if break-even, negative if cash-flow negative. Use the rental income tax calculator to estimate.

Discount rate / opportunity cost (%)
Annual return you'd earn if you sold and reinvested the net proceeds. Typical: 7–10% for equities, 4–5% for bonds. This is your hurdle rate — holding must beat it to be worth it.

Selling doesn't have to mean paying the full tax stack

If selling makes financial sense but the tax bill is painful, consider: a 1031 exchange defers the entire tax stack into a replacement property. An installment sale spreads the gain over years. Or hold to death and let heirs claim the §1014 step-up in basis — eliminating the tax entirely. A fee-only advisor specializing in real estate can model these paths with your actual numbers.

Get matched with a specialist →

How the Calculator Works

Sell-today tax stack

When you sell a rental property, federal tax hits in up to four overlapping layers — computed in this order:

§1245 recapture — cost-segregated 5-yr and 7-yr components you deducted (often via 100% bonus depreciation under OBBBA) are recaptured as ordinary income at your marginal rate, up to 37%.
§1250 unrecaptured gain — accumulated straight-line depreciation on the building (27.5-yr or 39-yr) is recaptured at a maximum 25% rate under IRC §1(h)(1)(D), plus NIIT if the property is passive.
Long-term capital gain — remaining appreciation is taxed at 0%, 15%, or 20% based on your total income, using income stacking (ordinary income + §1245 fills the bottom of the stack; LTCG sits on top).
NIIT — 3.8% surtax under IRC §1411 on net investment income (§1250 + LTCG) when AGI exceeds $200,000 single / $250,000 MFJ. Eliminated if you have REPS status and meet the 500-hour material participation safe harbor (Treas. Reg. §1.1411-4(g)(7)).

PAL carryforwards (Form 8582) release in full on complete disposition under §469(g), reducing taxable gain before these layers are applied. Use the PAL carryforward calculator to estimate your carryforward balance.

Hold-scenario NPV

The NPV of holding equals the present value of each year's after-tax cash flow plus the present value of the net after-tax sale proceeds at the end of the hold period — both discounted at your chosen opportunity cost rate.

The discount rate is the return you'd earn if you sold and reinvested. At 7%, $100K ten years from now is worth about $51K today. A higher discount rate makes holding less attractive; a lower one (e.g., if you'd invest in CDs at 4%) makes holding more attractive.

What this calculator doesn't model

1031 exchange — if you sell into a 1031, the tax is entirely deferred. Use the 1031 exchange calculator to model that path separately.
Mortgage paydown — the future sale uses today's mortgage balance, slightly understating the hold scenario's net proceeds (actual will be better as the loan amortizes).
State income tax — several states tax capital gains and depreciation recapture separately; California, New York, and New Jersey have no preferential capital gains rates.
Rental income tax during hold — fold your estimated annual income tax benefit (or cost) from depreciation and rental income into the after-tax cash flow input.

Is holding or selling the right call for your portfolio?

A fee-only advisor who specializes in real estate investors can run this analysis with your actual Schedule E, cost segregation schedule, and 1031 exchange options — before you make an irreversible decision.

REInvestorAdvisorMatch is a referral service, not a licensed advisory firm. We may receive compensation from professionals in our network.

Content is for informational purposes only and does not constitute financial, tax, or investment advice.

Sources

Tax values verified against 2026 parameters per IRS Rev. Proc. 2025-32: ordinary income brackets (single: 10%/$12,400 / 12%/$50,400 / 22%/$105,700 / 24%/$201,775 / 32%/$256,225 / 35%/$640,600 / 37% above; MFJ: 10%/$24,800 / 12%/$100,800 / 22%/$211,400 / 24%/$403,550 / 32%/$512,450 / 35%/$768,700 / 37% above). LTCG: 0%/$49,450 / 15%/$545,500 single; 0%/$98,900 / 15%/$613,700 MFJ (20% above). NIIT threshold: $200K single / $250K MFJ, fixed (IRC §1411, not indexed). §1250 max rate: 25% (IRC §1(h)(1)(D)). Values last verified June 2026.